EB-5 to trigger millions for real estate projects

Foreign investors could provide a much-needed boost to the Oregon economy as the state signs onto the growing EB-5 “Immigrant Investor” bandwagon.

Congress established the EB-5 program in 1990 to attract foreign cash by rewarding wealthy foreign investors with green cards. The idea is to create or preserve U.S. jobs by channeling foreign investment into “regional centers,” which function as brokers between investors and projects.

Until this year, EB-5 was largely absent from Oregon, even though a dozen firms were approved in Washington state.

That changed June 9, when the U.S. government approved the first of a series of applications from firms that want to establish EB-5 centers in Oregon. The result could be hundreds of millions of dollars available for real estate projects and business development.

American United Development Group secured the first approval and was followed by American Dream Fund LLC. Both are established operators with ties to Chinese investors and to the U.S. and Canada.

Both firms have pledged to invest heavily in Oregon-based projects, fueled by the increasing pace of visa applications from prospective immigrants.

Of more than 9,000 applications approved since 1991, about 40 percent were approved in the past three years.

The centers are authorized by U.S. Citizenship and Immigration Services. They currently operate in 41 states, Washington, D.C., and Guam.

Collectively, they have generated more than $2 billion in investments resulting in 41,000 jobs in the U.S.

A different view

American United will invest in projects across Oregon. It recently opened a Portland office.

American Dream will focus on investments in the Portland area.

The Portland Development Commission expects the federal government to approve more regional center applications before the clock runs out on the program later this year. Peter Englander, central city manager for PDC and its lead on fostering EB-5 centers in Oregon, said the agency sees foreign investors as an important new avenue for funding new construction and business development. But he cautions that EB-5’s mostly Asian investors bring a different view to the process.

“We’re all familiar with what it’s like to go to a bank or to go for venture capital or seed capital or even tax credit financing,” he said. “This is new.”

American United, which is based in Beijing, Los Angeles and Vancouver, British Columbia, has not yet closed on its first local deal but has established an office in downtown Portland and hired local real estate executive Marvin Kau to lead the office.

Kau said the firm is actively seeking new construction projects to help American United’s mostly Asian investors meet the U.S. requirements, which link green cards to the number of new jobs created by the investment. Investors can secure temporary and eventually permanent green cards for themselves and immediate family, including minor children, if their investment creates or preserves 10 full-time U.S. jobs.

American Dream Fund, the second approved center, already has deep Oregon ties. Its president, Joseph McCarthy, is a native Oregonian. McCarthy lives in California but has family in the area and a home in Lake Oswego.

McCarthy said American Dream Fund is focused on investments in the $10 million to $60 million range. Because EB-5’s chief goal centers on job creation, McCarthy said American Dream generally seeks projects centered on new construction. Hotels, nursing homes, hospitals, medical offices, manufacturing plants and commercial office development all tend to support increased employment, he said.

American Dream Fund’s Los Angeles office has arranged several deals, including a successful $20 million investment in a Hollywood hotel.

“I hope to replicate some of that success back home in Portland,” McCarthy said.

Sharon Rummery, a spokeswoman for Citizenship and Immigration Services, said the agency has 120 applications pending from would-be regional center operators across the country.

Wilson Chen, president of Portland-based American Pacific International Capital, said his firm has applied for regional center status and is waiting for word on its approval to operate in Portland.

What is EB-5|

Congress created the EB-5 Immigrant Investor Program in 1990 to induce foreign investment and generate economic activity. Foreign citizens who invest $500,000 to $1 million in new businesses organized through government-approved regional centers can qualify for U.S. visas. Congress has to vote to reapprove EB-5 every two years. The current program expires in September 2012.

The rules: Immigrant investors must invest in new commercial enterprises that create or preserve at least 10 full-time jobs within two years.

Minimum investment: $500,000 in high unemployment or rural areas, $1 million in all others.

Oversite: U.S. Citizenship and Immigration Services.

EB-5 by the numbers

Total invested: $2.1 billion

Jobs created (as of Aug. 3, 2011): 41,070

Number of Regional Centers (As of Oct. 12, 2011): 179 in 41 states including Guam and Washington, D.C.

Regional Centers in Oregon: Two (American Dream Fund LLC and American United Development Group). An application from Portland-based American Pacific International Capital is pending.

Some examples of EB-5 projects

EB-5 projects have ranged from hotels to office buildings. A few examples:

• The Marriott Hotel, a 377-room, $118 million project in Los Angeles, is being co-developed by Portland’s Williams & Dame Development and American Life Inc. The 22-story project includes a 180-room Courtyard by Marriott and 197-unit Residence inn by Marriott. It is slated to open near the L.A. Live entertainment venue in March 2014.

• Solaris, a $375 million mixed use project in Vail, Colo., is seeking $80 million from foreign investors, which could translate into as many as 160 green cards for immigrant investors and their families, according to the Denver Post.

• Homeplate Plaza, a $155 million retail and office complex next to Safeco Field, immediately south of downtown Seattle, will bring 296,154 square feet of space to the market in mid-2013.